Reverse Offshoring – Using Data Centers in US – An opportunity to save money?

A while ago we had highlighted how Netflix came out unscathed from the AWS Outage of September 2015. As you may recollect Netflix managed that with a fallover or multi region concept that involves replication of data between datacenters for rapid recovery from failures.

Data replication by Netflix was within US and an extension of this is replication across continents leading to a more comprehensive diversification.

But is disaster management the only plus of multi-region or multi-vendor cloud strategy?

In our view, this strategy can not only help you recover well from an unplanned outage but also result in dollar savings on account of marked price difference within regions for virtual machines.

US was not only the pioneer for cloud resources, it also is the most competitive and therefore the cheapest. Across all providers there is a consistent trend that virtual machines come at a huge discount in USA when compared to its peers in Asia, South America or even Europe. Currently expenses for running a Virtual Machine in Brazil (South America) can be around 1.5 times of what it would cost in an American datacenter. The magnitude of variation within the developed world of Europe & US is a tad less but still in the range of 10% to 25%.

Refer to the diagram below to see the price difference across regions and providers for a 2 core machine.

Figure 1: All comparisons are for a 2 Core Virtual Machine, Percentage means the % premium paid in Singapore (SGP) or Sao Paulo or EU (Frankfurt/Amsterdam) for a Virtual Machine when compared to a US Datacenter.

Price Premium for emerging economies like in Asia Pacific is understandable on account of higher establishment costs, low level of competition etc. But as we see above, customers can incur savings by an intelligent mix of resource utilization across regions.

So engage in reverse off-shoring to US & Europe as far as cloud resources are concerned & Save Money! Contact our sourcing team under consulting@ascamso.com for further advice or visit our platform @ https://app.ascamso.com to conduct your own analysis.

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